The embattled Governor of the Bank of Portugal revealed today that seven companies remain interested in bidding for Novo Banco.
In his second appearance in front of the commission of inquiry looking at the collapse of BES, the Bank of Portugal Governor, Carlos Costa, said the solution imposed on BES was not intended to destroy the bank but to help rescue the entire banking system.
Costa said the resolution of the problem, splitting BES into two parts, was less punishing than the grim alternative and had allowed the new management at Novo Banco some time to "restore confidence in the institution."
Carlos Costa said the sale process for Novo Banco, which started last December 4, is proceeding smoothly and according to plan.
The governor announced that seven companies are left in the frame from an original 15 and they may or may not make final bids.
Among the bidders are Santander, BPI, Apollo and Fosun which, claims Costa, shows there is strong interest in Novo Banco. This was the end of Costa's one and only red herring and the committee then got down to business.
Costa claims that up to June 2014 no facts were identified that pointed to the impending collapse of BES and that the conclusions of the forensic audit suggested that the true situation was known by the BES board who had a duty to report it to the Bank of Portugal, which it failed to do.
Regarding the BES bondholders who were sold investments in BES branches and have been hung out to dry by regulators and Novo Banco alike, Costa maintained that the repayment of this 550 million euro debt to BES customers is the responsibility of the respective issuers and says it would be "illegal for Novo Banco to take on this responsibility."
Other choice comments include -
"I did not steal anything from anyone.
"This weekend I was dubbed a thief. I did not steal anything from anyone, the Bank of Portugal did not steal anything from anyone," says Carlos Costa.
"If the Bank of Portugal had climbed down, it would have cost the country a lot.
“When people invest in risky products, they need to be risk-takers.
"We can not rewind the story, the story is what it is. On February 14, 2014 the Bank of Portugal has banned the sale of these products, which was even seen as innovative," said Costa who them blamed the share sales in BES branches on “an authority” referring to, but not mentioing by name, the Securities and Exchange Commission which Costa said had approved the bond sales.
Costa said the holders of commercial bonds in Grupo Espírito Santo companies are entitled to stake their claims in the insolvency proceedings.
The governor believes that BES customers who want their money back may have preference over some other classes of creditors and said that Novo Banco may make them an offer.
The Governor said that the expectation is that investigations into to Grupo Espírito Santo and Banco Espírito Santo will be completed in 2016 "and only then can we define responsibilities."
To a question from Cecilia Meirelles, Costa snapped back, "there is no one in these past five years that has been more concerned" with the confidence and the soundness of the banking system.
By taking over at the Bank of Portugal in 2010, Costa said he inherited a banking sector with impairments of €30,000 million.
The sector arguably may look in better health but Costa still faces myriad calls for his resignation from those who claim he sleepwalked through the period leading up to the BES collapse, missed signs that the Group was in poor financial health and failed to spot the risk that BES Angola posed to its parent company.
Nobody is responsible for the BES collapse. Ricardo Salgado blames the Bank of Portugal, the Bank of Portugal blames the Securities and Exchange Commission, everyone blames BES Angola and the commission of inquiry has yet to conclude its frustrating task of trying to pin down these consummate performers.
